NCPA - National Center for Policy Analysis


February 24, 2006

After two decades of negotiations, the United States agreed to stop using European names on American wine labels in exchange for upgraded access in Europe's wine market, says Jim Clarke of Foreign Policy magazine.

Last September, the United States and the European Union reached an agreement forbidding the use of European place names such as Burgundy, Sherry and Champagne on American wine labels. In exchange, American wines made using nontraditional methods -- such as oak chips instead of oak barrels, or special filtration processes -- may sell in Europe like any other fine wine. The agreement will benefit American winemakers, say observers:

  • Since striking a similar agreement with Brussels in 1994, Australia's market share in Europe expanded, with tripling sales in Britain, their biggest European consumer.
  • The California-based Wine Institute estimates "pre-agreement" U.S. wine sales in Europe were only $487 million in 2004, considerably less than Australian sales of more than $1 billion.
  • A grandfather clause allows U.S. companies continued use of European labels until at least 2009.

The grandfather clause frustrates European producers who claim mislabeling is unfair for consumers. However, the agreement is welcome news for American wineries, who have long sought the European market. For the first time, American Viticultural Areas have the same protections as European appellations. The deal should help the United States pour a little more into Europe's cup, says Clarke.

Source: Jim Clarke, "Rules of Imbibement," Foreign Policy, No. 152, January/February, 2006.


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